Please
read the information below regarding an urgent matter which may
affectupcoming transactions.

Regards,

Shannon
Skurner

Closing
Activities Concerning "Short
Sales"

It
has recently been discovered that personnel involved in closing
transactionsare being asked to
actively participate in
negotiating short sale pay offs or other
terms. These requests can come from any
person interested in the sale, but in particular, the sellersor the real estate
agent. Participatingin such
negotiations or closing short sales could expose an
individual, the
title agencyor the
underwriterto any
number of claims or lawsuits.

What is a short
sale?

A short
sale is commonly described as an agreement between
the
sellersand their
current lender,and often other secured
creditors, to allow the property to be
soldfor less than the amount owed on
the mortgage or other claims. Short sales are
often associated with "flip"
transactions. Justifiably or not,
a short sale followed by another sale for a higher price
has all of the appearances of a flip transaction.

The legal and tax
consequencesof short sales are
complicated and numerous. Great caution should be
exercised to avoid giving or
appearing to give, tax or legal advice,
particularly to the sellers. Short sales may also implicateIRS or other reporting (by the sellers, lender or
other persons) for personal and other income taxes that
are above and beyond typical IRS 1099-S or similar state
real estate reporting requirements.

Negotiating short sale
termson behalf of anyone interested in
the sale likely violates the
unauthorized practice of law of any
state and exposes individuals and the companies to
claims of breach of contract or fudiciary
obligations. Never
assumethat the person receiving a draft
or pro forma HUD-1 has all the facts that you have, and
visa versa.

Complete
and accurate disclosure of
all facts is the best defenseto the
potential claims as mentioned above. Follow instructionscarefully, obtain
writtenauthorization whenever possible
and ensure that the final
HUD-1 iscomplete and
accurate.

Should you have
any questions or require further information, please
contact David Rhodes or Steve Streiff in our Legal
Department.

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